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Bombay High Court
CHANDURKAR,MEHTA
Hind Construction and Engineering - Appellant
Versus
Union of India - Respondent
Decided On : 12/23/1981
ARBITRATION - CERTIFICATE - CONDITION PRECEDENT - CONTRACT - INTERPRETATION - JURISDICTION - POWER OF ARBITRATOR - SCOPE OF REFERENCE.
Fact of the Case:
The Government of India entered into a contract with the Contractor for the development of the Bombay Harbour. Disputes arose between the parties, and the Contractor stopped the work. The Government forfeited the contract and entered the site. The Contractor invoked arbitration under the contract. The Arbitrator found an amount due to the Contractor and an amount due from the Contractor to the Government. The Contractor challenged the award in respect of the amount due from him to the Government, contending that the Arbitrator had misconstrued the contract and that a certificate from the Engineer was a condition precedent to the Government's counterclaim.
Finding of the Court:
The Court held that the requirement of a certificate under the contract was not a condition precedent to the Government's counterclaim. The Court found that the arbitration clause in the contract was widely worded and gave the Arbitrator the power to open up, review, and revise any decision, opinion, direction, certificate, or valuation of the Engineer. The Court also found that the parties had agreed to refer all disputes to arbitration, including the Government's counterclaim. The Court concluded that the Arbitrator had jurisdiction to entertain the Government's counterclaim and that the absence of a certificate did not prevent the Arbitrator from dealing with the dispute.
Issues: 1. Whether a certificate from the Engineer was a condition precedent to the Government's counterclaim. 2. Whether the Arbitrator had jurisdiction to entertain the Government's counterclaim.
Ratio Decidendi: 1. The requirement of a certificate under the contract was not a condition precedent to the Government's counterclaim because: (a) the arbitration clause in the contract was widely worded and gave the Arbitrator the power to open up, review, and revise any decision, opinion, direction, certificate, or valuation of the Engineer; (b) the parties had agreed to refer all disputes to arbitration, including the Government's counterclaim; and (c) the absence of a certificate did not prevent the Arbitrator from dealing with the dispute. 2. The Arbitrator had jurisdiction to entertain the Government's counterclaim because: (a) the arbitration clause in the contract was widely worded and gave the Arbitrator the power to open up, review, and revise any decision, opinion, direction, certificate, or valuation of the Engineer; (b) the parties had agreed to refer all disputes to arbitration, including the Government's counterclaim; and (c) the absence of a certificate did not prevent the Arbitrator from dealing with the dispute.
Final Decision: The Court dismissed the Contractor's appeal and upheld the Arbitrator's award.
CHANDURKAR, J. :- This Judgment will dispose of Appeals Nos.273 and 274 of 1976. Both these appeals arise out of two judgments delivered by Lentin J. in two Award Petitions which were filed by the Appellant Company, hereinafter referred to as 'the Contractor' for setting aside two Awards, dt. 14th Feb. 1974 arising out of disputes between the Contractor and the Union of India, the Respondent herein, in respect of a contract of construction for the development of the Naval Dockyard at Bombay, for which the tender of the Contractor was accepted by the Government of India. In view of the limited challenge to the two Awards, both in the trial Court as well as in this Court, it is not necessary to set out in detail the events which led to the contract of construction. It is sufficient to state that in connection with the scheme for the development of the Bombay Harbour on or about 1952, the Government of India had entered into an arrangement with a concern known as "Sir Alexander Gibb and Partners", referred to hereafter as "AGP Engineers" for the preparation of a detailed design after carrying out the necessary survey and investigation the contract which was intended to be given to the Contractor was intended for the work which was described as follows :-
1. Rock breaking and dredging.
2. Dredging of soft material.
3. Construction of Barracks and Destroyer wharves standing on vertical cylinders.
4. Boat Pond wall.
5. Custom Basin wall.
6. Mint storm water culverts and mint reclamation.
The Government of India invited global tenders for the work. The Contractor's tender was accepted by the Government in Aug, 1954 and the contract was formally signed on 2nd Sept. 1954. Works Order under Cl.41 of the contract was issued on 24th Sept. 1954.
2. However, before the completion of the works, the Contractor addressed letters, dt. 9th Jun 1956 and 11th June 1956 to the Government informing the Government of India that the Contractor had stopped the work of dredging and rock breaking. Finally on 4th Sept. 1956, after attempts to make some amicable settlement to enable the Company to complete the work had failed, the Contractor informed the Government that they were taking steps to wind up the organisation and that the plants machinery, stores etc. lying at the site would be at the risk and responsibility of Government. Government thereupon forfeited the contract under Cl.63 of the Agreement of Contract, which we shall shortly reproduce, and entered the site on 27th/28th Dec. 1956. On 2nd Feb. 1957 Government finally decided to carry out the unfinished contract works departmentally.
3. On or about 26th Dec. 1956, the Contractor served a Notice u/s.80 of the Code of Civil Procedure on the Union of India, but later on invoked Cl.66 of the contract for arbitration. Mr. J.M. Mazumdar, retired Judge of the Calcutta High Court was appointed sole Arbitrator. Unfortunately, after entering on the reference, he expired before any evidence could be, recorded. Thereafter the Union Government appointed Mr. Bishan Narain, retired Judge of the Punjab High Court to act as the sole Arbitrator and the Arbitrator entered upon the reference on 15th April 1961. Before the Arbitrator, the Company claimed an amount of Rs. 84,47,527/- on various grounds. The Respondent Union of India made a counter-claim against the Contractor for. Rs. 2,65,00,000/-. In the course of the proceedings before the Arbitrator, a question arose as to whether the Arbitrator had jurisdiction to entertain the Respondent's counter-claim aggregating to Rs. 2,65,00,000/-. There upon the Union of India by its letter, dt. 8th Jan. 1962 appointed the Arbitrator as the sole Arbitrator under Cl.66 of the contract to adjudicate upon the claim of the respondent contained in Parts A, C and D of the Respondent's pleadings filed before the Arbitrator on 1st June 1961. On 9th Jan. 1962, the Arbitrator entered upon the Reference. On 11th Jan. 1962 both the parties made a joint submission giving th
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